KUALA LUMPUR: Malayan Banking Bhd's (Maybank) strategy in developing sustainability-focused products and services, fostering financial inclusion, cultivating good governance practices, and shifting away from environmentally, socially, and governance (ESG) vulnerable sectors clearly demonstrates the bank's position as a leader in the space.
Hong Leong Investment Bank Bhd (HLIB) said Maybank has also set a targeted outcome to become regional ESG leader by 2025 by looking to mobilise RM50 billion in sustainable finance, which includes direct lending or investment and services, which will integrate ESG criteria.
The bank also aims to improve the lives of one million households across Asean by providing greater financial inclusion for vulnerable communities and achieve carbon neutrality thru own emission and net-zero carbon equivalent positions by 2030 and 2050 respectively.
These, along with Maybak's initiatives in shaping a sustainability culture among employees whereby the progress of these key performance indicators will be monitored by an enhanced exco sustainability committee and newly formed board sustainability committee.
To further embark and delve deeper into its ESG journey, Maybank has developed business approaches and risk acceptance criteria for targeted sectors.
The bank has established ESG Industry Scrums to produce position papers revolving around business strategy and RAC to embed as
part of the decision-making process in portfolio management and analysing customer data.
While Maybank intends to encourage customers to be more ESG aligned, they do not wish to be an enforcer and willing to forgo small borrowers who don't have the resources to share its sustainability vision, HLIB noted.
At the end of Mar 2021, 5.4 per cent of Maybank's loan exposure is classified as ESG vulnerable sectors, namely palm oil (2.3 per cent), forestry and logging (0.7 per cent), coal (0.2 per cent), oil and gas (2.0 per cent), and mining (0.2 per cent).
HLIB retains a "buy" call for Maybank with a target price of RM9.40 and maintains its forecast unchanged since there were no material positive or negative updates.
"For banks under our coverage, Maybank has the highest ESG grade, based on our analysis.
"In our view, the stock's risk-reward profile is still skewed to the upside premised on it being a prime candidate for rotational recovery play among FBMKLCI constituents when appetite for this theme returns and less susceptible to foreign equity sell-off," the bank-backed research firm noted.